Find out in part 4 with QSR Media’s interviews with four industry and marketing experts on discounting.
QSR Media: What are the dangers involved in discounting?
Steve Hansen—King of Strategy at Think DONE Management Consultancy: The real danger is in providing discounts to the customer when they would have paid full price anyway, and because of this it is important that offers are only on the board for a period of time, otherwise the customer will expect that that is the price all of the time. Many stores put up a promo line at a price and it is still up months later!!
Costa Anastasiadis—Director of ENA Hospitality Group: People may begin to perceive you as a discounted or sale product - meaning that's the only time they would purchase. Similarly the stigma around your brand could be that of a discounted or cheaper product. This could raise the questions on quality and service and subsequently effect the credibility of your brand.
Another real danger is the onset of price wars. The company with the largest bank balance, who can hold out the longest may have the advantage in this case. Not a great strategy to drive profit.
Merrill Pereyra—Mentor at Start Up & Emerging Ventures: How do you then bring your prices up to the normal price after the discounting period. Customers will always perceive that they are being overcharged when they go back to the normal price.
Armina Soemino—Emerging Equities Research analyst at J.P. Morgan Chase & Co.: The biggest problem with discounting is trying to get the customer to revert back to a “normal” pricing level post the discounting period. This appears even more difficult in the current retail environment where discounting appears to be the new norm and the customer is almost trained to expect a discount. Customers actively hunt deals – on shop-a-dockets, online vouchers, mailbox flyers, etc.
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